Comment of the Day
Video commentary for April 11th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Bonds yields continue to accelerate, stocks pullback, oil closes below $100, bitcoin below $40,000, defensives continue to outperform.
Pension Funds' Billions Loom as Force to Cap Long-Term Yields
This article from Bloomberg may be of interest to subscribers. Here is a section:
The unmooring of long-term Treasury yields just keeps gaining momentum. Yet there’s a wall of corporate cash lurking on the sidelines, which could curb further bond losses.
Demand from pension funds “should help cap the path of long-end rates ultimately,” Shahid Ladha, head of Group-of-10 rates strategy for the Americas at BNP Paribas SA, told Bloomberg Television Monday. “In terms of their appetite and possible support to U.S. fixed income, we have seen an average of $10 billion a quarter or $40 billion a year.” However, demand this month has been below average -- so it has room to pickup, he added.
Ten-year U.S. rates climbed through 2.75% Monday for the first time since March 2019, following a wave of rising yields in Europe as traders intensified global bets on aggressive rate hikes from major central banks. While benchmark rates may climb even higher, likely breaking above the 3%, demand for Treasuries will probably resurface, Ladha said.
My view - When there was $17 trillion in negative yielding debt very few investors were worried about the surety of long-term losses. They were too interested in short-term momentum driven gains to give much thought to the long-term.
Two Oil Supertanker Giants Combine to Form World's Largest Fleet
This article from Bloomberg may be of interest to subscribers. Here is a section:
Frontline Ltd (NYSE:FRO). and Euronav NV are considering an all-stock merger that would produce the world’s biggest tanker fleet, just as Russia’s invasion of Ukraine drives a recovery in the market.
The creation of a tanker behemoth -- capable of carrying the equivalent of about 100 days of German daily oil demand -- would come at an opportune moment. With shippers shunning Russian vessels, demand for other carriers is increasing, boosting a market that’s languished for more than a year.
Shares of both Frontline and Euronav have rallied this year, valuing a combined tanker company at more than $4.2 billion.
“A combination of Frontline and Euronav would establish a market leader in the tanker market and position the combined group for continued shareholder value creation in addition to significant synergies,” John Fredriksen, who owns a 39% stake in Frontline, said in a joint statement on Thursday.
My view - The Baltic Dirty Tanker Index remains on a recovery trajectory since Russia’s fleet is having difficulty moving around. The Index hit a new 14-year high on Friday. Meanwhile Brent Crude Oil (LSE:BRENT) prices are back below $100 and likely to fall further as China’s demand outlook worsens. That begs the question how long the surge in tanker prices will last.
'Altcoins' Lead Crypto Lower as Bitcoin Drops to Three-Week Low
This article from Bloomberg may be of interest to subscribers. Here is a section:
Cryptocurrency losses accelerated, with popular Defi tokens such as Cardano and Avalanche falling more than sector bellwether Bitcoin, as risk aversion sweeps through financial markets.
Bitcoin dropped as much as 6.1% to $40,510, the first time the largest cryptocurrency by market value has been below $41,000 since March 22. Ether, the second largest, was down as much as 9.5%, dipping below $3,000. Altcoin, or alternative coin, Luna was down around 8.4%, while Avalanche was off 10% and Cardano slumped 11%.
Since peaking at just above $48,000 in late March, Bitcoin -- and other tokens -- have been dragged lower by concerns about tighter monetary policy. Even the buzz around last week’s Bitcoin 2022 conference in Miami wasn’t enough to reverse the trend.
“Historically, altcoins have a tendency to over perform Bitcoin to the downside in strong bearish trading environments,” said Josh Olszewicz, head of research at crypto investment firm Valkyrie. “Altcoin trading participants often have less longer-term conviction.”
My view - The Miami crypto conference concluded over the weekend with some very bullish forecasts for both the price and role of cryptocurrencies in the economy of the future. It’s not uncommon for big bullish gatherings like this to create demand for the sector. The challenge in the near-term is the market is very liquidity dependent. Bitcoin tends to do well when liquidity is both cheap and abundant. That’s not currently the case.
Eoin's personal portfolio: stock market short initiated March 31st 2022
One of the questions subscribers as most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.
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